Court Dismisses Minority LLC Members’ Derivative Claims For Failure To Plead Demand Futility In The Complaint

Posted: August 7, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Fiduciary Duties, Preliminary Injunction, Court Rules/Procedures

Court Dismisses Minority LLC Members’ Derivative Claims For Failure To Plead Demand Futility In The Complaint

On April 22, 2026, in Mayer v. Goldner, Index No. 659341/2025, Justice Andrea Masley denied plaintiffs’ motion for appointment of a temporary receiver and a preliminary injunction and granted defendants’ cross motion to dismiss the complaint.

Plaintiffs, minority members of several LLCs that own skilled nursing facilities, alleged that defendant Samuel Goldner abused his control and management of the facilities to divert the entities’ assets for his personal and family use, conduct that allegedly resulted in the Chapter 11 bankruptcy of the LLCs’ managing member, Goldner Capital Management LLC (“GCM”). Plaintiffs asserted direct and derivative claims and sought a temporary neutral receiver and a preliminary injunction against dissipation of anticipated proceeds from property sales approved by the Bankruptcy Court. The Court held that the Bankruptcy Court’s decision to keep Goldner in place as manager was binding and precluded appointment of a receiver, and denied the preliminary injunction because money damages were available and plaintiffs’ delay in commencing the action undermined their assertion of imminent irreparable harm. The Court dismissed the derivative claims—the bulk of the complaint—because plaintiffs failed to plead demand futility. The Court explained:

Plaintiffs’ discussion of demand futility in their MOL on reply and in opposition to the cross motion to dismiss is insufficient to assert demand futility. Plaintiffs must allege demand futility in the complaint. Moreover, plaintiffs’ allegations of Sam’s history of bad acts are not sufficient to explain why GCM would necessarily reject such a demand. Sam’s failure to comply with an information subpoena in 2024 does not justify plaintiff’s demand futility argument. Nor does it repair plaintiffs’ failure to allege demand futility in the complaint. Plaintiffs’ failure is particularly confounding since GCM has been under the Bankruptcy Court’s supervision since 2024 and this action was filed in 2025 while the Bankruptcy court was in control of GCM. Plaintiffs fail to explain why they could not have made the demand to the bankruptcy court. Therefore, plaintiffs’ derivative claims are dismissed.

(citation and footnotes omitted)

The Court also dismissed plaintiffs’ direct claims, holding, among other things, that a non-managing member of an LLC owes no fiduciary duty to other members, and observed that any claims that survived would in any event be arbitrable under the operating agreements’ arbitration provision.

The attorneys at Schlam Stone & Dolan LLP frequently litigate derivative claims and disputes among members of closely held LLCs. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.